We all know how important fixed assets are for an organization. Hence, fixed assets can influence the balance sheet & statement of a firm. When an organization does not keep the assets record updated, it can result in a huge penalty. Moreover, it encourages employees for asset theft, misplacement, loss and not taking responsibility for assets.
What is Asset Auditing?
Asset auditing is the process of physical verification & inspection of fixed assets. In the process a list created of fixed assets by organization’s end then it is cross-checked by the auditor. Moreover, fixed asset value is influenced by several factors such as age, working condition, and if an asset is under warranty or not.
The purpose of the asset audit is to maintain accuracy and transparency about assets in the books and records.
Why asset auditing is important for an organization?
Here are the important reasons why regular asset auditing is important:
- Incorrect balance sheet identification
- Minimizing asset loss and theft
- Identify ghost assets and phantom inventory
- Ensure compliance
- Discover discrepancies
- Prepare you for external audits and identify issues in advance
Why asset auditing is more important for equipment and tool rental organizations?
Asset auditing is important for equipment and tool rental organizations as they provide an asset to other organizations on rent. Therefore, it is important to keep track of the equipment. Otherwise, the asset audit will be effective. When you don’t keep track of assets and no information is kept. Then asset life is not calculated accurately. This may result in underutilization of assets. Similarly, depreciation calculation will also be not accurate due to insufficient information about assets.
How does asset management software help in asset auditing?
Below we have mentioned some benefits how asset management software helps in asset auditing:
Asset management software makes the asset audit process simple, quick and effective. It has several features which can be very useful that can assist in asset auditing. For example, asset tracking, through this feature you can know real-time asset location and information as well.
For asset tracking Barcode, RFID (asset tracking techniques) are used. Activity tracking of asset is also there to assist you better.
Moreover, the check-in checks out feature are also very useful for auditing. It allows you to know assets whereabouts whenever you want. It keeps you always informed about the asset such as what is the exact location, what is the status of an asset, who is using that asset & when an asset will be returned etc. You can know answers to these question with check-in check out feature.
With the software, you can identify ghost assets (those assets which are physically not there, either they are missing or lost but mentioned in account book) which are very harmful to your business. How? You are paying taxes for those assets which you are not even using.
According to the website “by retiring unused assets, companies may reduce tax bills for assets by as much as 20–30%.”
If an organization using software which is expired and if that is found in the audit. Then, the company will have to pay a huge amount of fine because it is illegal and violation of compliance. But asset management software keeps track of asset information and notifies you in advance about software expiring date so you are alerted in advance and in a position to make a well-informed decision. A regular audit will ensure compliance and provide you with peace and makes your organization ready for external audit.
When all the information about an asset is filled then this software assists in depreciation management easily. We know that as time goes by the value of an asset is decreases. Depreciation offers the way to the organization to disperse the expense of an asset as per the useful life of the equipment and asset. In simple words, it helps the organization to earn revenue from asset life
In short! Some useful asset management software benefits for asset auditing are:
- Asset tracking
- Asset life cycle management
- Audit report
- Depreciation report & management
- Regulatory compliance
- Eliminate ghost assets
Without asset management software the audit process will be hectic and prone to error. Auditing is very important for all businesses. It can also help in proper accounting of assets. Managing asset life and depreciation efficiently.
Moreover, asset management software is cloud-based and mobile-based. It means that audit can be done offline and when it is connected to the internet it will automatically synchronize data and information. Undoubtedly, it will make audit well-coordinated and supervised.